State-run banks in India are offering car loan rates below 7.5%, creating significant savings for borrowers and prompting private lenders to adjust offerings amid fee waivers and concessions.
Car loan shoppers in India can still find deals below 7.5 per cent a year, with state-run banks leading the way on headline rates, according to data compiled by Paisabazaar. UCO Bank has the lowest starting rate in the comparison at 7.35 per cent, while Bank of Maharashtra and Canara Bank begin at 7.45 per cent. Central Bank of India, Indian Bank and Union Bank of India all start at 7.50 per cent.
The gap between lenders can make a meaningful difference to monthly repayments. For a Rs 5 lakh loan over five years, Paisabazaar’s comparison puts the EMI at Rs 9,983 at UCO Bank and Rs 11,647 at Punjab and Sind Bank, a monthly difference of Rs 1,664. Over the full term, that can add up to close to Rs 1 lakh in extra outgo.
Lenders are also using fee waivers and temporary concessions to stand out. Bank of Maharashtra is offering a 0.25 percentage point interest concession to existing home loan customers and others with at least six months of banking history, while Canara Bank is waiving half its processing fee until September 30, 2026. Central Bank of India and Indian Overseas Bank are among those showing no processing fee in the comparison, though the exact charge can still depend on the borrower and the bank’s internal rules.
Among private lenders, the starting rates are higher. HDFC Bank’s car loans begin at 8.15 per cent, ICICI Bank’s at 8.40 per cent and IDFC FIRST Bank’s at 8.99 per cent, while State Bank of India starts at 8.70 per cent. ICICI Bank says its rate depends on factors including the car segment, credit score, customer relationship and loan tenure. The broader point for borrowers is that the best loan is not always the one with the lowest advertised rate: processing fees, repayment tenure and the total interest paid over time can matter just as much as the EMI.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
